MSD? Your Thoughts

[TTyza]

Hi guys,

I'm in the process of leasing a x5m and have been researching MSD's and I think I'm going to pass on the idea but interested in others thoughts.

For simplification purposes lets say the selling price on the vehicle is 100k. Using the current MF and Residual rate I'm getting a total lease payment over the term of the lease of $46,530 with no MSD's

With the full 7 MSD's at $9,100 down the total payment over term is $43,419

So essentially you get a $3,111 savings over 36 months or a cash on cash return of 34.1% & an IRR of 11.36%.

I guess if you have a corporate job and don't have time to actively invest and manage your money this could be a good option, interested to see everyone's thoughts.

Cheers!

[eleven11]

I don't spend much time actively investing, so maximizing the MSDs is a no brainer for me.

[spuntyb]

Originally Posted by TTyza

Hi guys,

I'm in the process of leasing a x5m and have been researching MSD's and I think I'm going to pass on the idea but interested in others thoughts.

For simplification purposes lets say the selling price on the vehicle is 100k. Using the current MF and Residual rate I'm getting a total lease payment over the term of the lease of $46,530 with no MSD's

With the full 7 MSD's at $9,100 down the total payment over term is $43,419

So essentially you get a $3,111 savings over 36 months or a cash on cash return of 34.1% & an IRR of 11.36%.

I guess if you have a corporate job and don't have time to actively invest and manage your money this could be a good option, interested to see everyone's thoughts.

Cheers!

11% is high, at least in relative terms. If you can do better with your money elsewhere then go for it, but this $ is yours even as it sits in BMWFS' coffers and doesn't risk any losses, so there's that to consider too. It's one of the surer bets in auto leasing, so to me, it was a no brainer. That said, there are probably plenty of places to throw this money and see much bigger returns if you know what you're doing and have the time. I don't.

[TTyza]

Originally Posted by spuntyb

11% is high, at least in relative terms. If you can do better with your money elsewhere then go for it, but this $ is yours even as it sits in BMWFS' coffers and doesn't risk any losses, so there's that to consider too. It's one of the surer bets in auto leasing, so to me, it was a no brainer. That said, there are probably plenty of places to throw this money and see much bigger returns if you know what you're doing and have the time. I don't.

Good point, in all honesty it was a better "return" than I had originally expected.

[Bibendum]

Don't forget to equate for taxes. Any return needs to be net of taxes to be equal, so actual return likely much higher.

[PatrickC23]

I estimated a 40% return on my money with 7 MSDs - no brainer. If you got the money for an X5M, you should probably also have the ability to park that money away as a deposit for 3 years.

[TTyza]

Originally Posted by Bibendum

Don't forget to equate for taxes. Any return needs to be net of taxes to be equal, so actual return likely much higher.

True, the majority of my investments are in the Real Estate sector and I 1031 exchange the majority of the deals, but yes I agree as for most that's not the case, good insight!

[TTyza]

Originally Posted by PatrickC23

I estimated a 40% return on my money with 7 MSDs - no brainer. If you got the money for an X5M, you should probably also have the ability to park that money away as a deposit for 3 years.

Not a matter of having the money, rather comparing that return over a three year period to what I can make on that in another venue, glad BMW has such a great MSD program for those that don't want to worry about it though!

[PatrickC23]

Originally Posted by TTyza

Not a matter of having the money, rather comparing that return over a three year period to what I can make on that in another venue, glad BMW has such a great MSD program for those that don't want to worry about it though!

Just a generalization - not aimed at you, but youd be hard pressed to get that guaranteed return anywhere else. BMW MSD program is great, unfortunately not everyone has the opportunity to take part in it based on their state.

[TTyza]

Originally Posted by PatrickC23

Just a generalization - not aimed at you, but youd be hard pressed to get that guaranteed return anywhere else. BMW MSD program is great, unfortunately not everyone has the opportunity to take part in it based on their state.

I got you, what states are excluded just out of curiosity?

Cheers!

[PatrickC23]

Originally Posted by TTyza

I got you, what states are excluded just out of curiosity?

Cheers!

I work in NY and live in NJ - so locally I know that you cannot do MSDs in NY, but you can in NJ. I was however told my my SA that this is based on state of purchase and not state of residence as it is a state bank regulation for manufacturers who opt to allow them (thats unverified).

I am not a fan of leasing normally, but BMW's deals with MSDs on the X5M was tough to pass up on.